Its been a very smooth ride with Windows 7 and after a few month now sence I got it I have had almost no problem at all with playing movies and that also include .mkv files.
The codec pack I found and that I highly recommend for any windows 7 users is the Shark Codec pack.
One has to remember to read and follow the information on howto etc otherwise its possible it wont work flawless for you. Its important to update this pack frequently as I personal encountered a prob where I suddenly couldnt read the subtitle file .srt with the deafult windows media player but after the latest update that I did today...everything works as it should again. If one implement and install this correct one should actually not need any other player and thats great because I always found it a bit irritating to have to use diffrent players to be able to watch a movie.
/UpNorth